How about smart villages, Mr Modi?

For over two decades now, agriculture has suffered overall neglect as successive governments, led by World-Bank prescribed growth models, have issued disproportionate doles to industry. While the present allocations do not spell much hope, Devinder Sharma suggests what the Modi government may still do to reverse the trend.

I have never understood why Indian farmers continue to be ignored. Even with a meagre outlay every year, Indian farmers have been producing a bountiful harvest. If only these farmers were aided with a much-needed economic stimulus package, I am sure they would flood the country with food, fruits and vegetables. India could certainly emerge as one of the biggest exporters of agricultural commodities.

In 2013-14, farmers produced a record harvest of 264.4 million tonnes of foodgrains. Production of oilseeds reached a record high of 34.5 million tonnes, with a jump of 4.8 per cent. Maize production increased by 8.52 per cent to reach a level of 24.2 million tonnes. Pulse production also reached an all-time high of 19.6 million tonnes, an increase of 7.10 per cent over the previous year. Cotton production, too, touched a record high.

However, in the same year, that is in 2013-14, when farm production recorded a quantum jump, agriculture received Rs 19,307-crore from the annual budget kitty, which was less than 1 per cent of the total budget outlay. This year, which promised to be the harbinger of achche din, saw Finance Minister Arun Jaitley providing only Rs 22,652 crore to agriculture and cooperation departments. Evidently, the apathy towards agriculture continues.

Pic: McKay Savage via Wikimedia

Agriculture in India employs 60 crore people, nearly 82.2 per cent of whom are small and marginal farmers. With meagre land holdings, and virtually no financial support, this majority population has somehow managed to survive. Studies have shown that nearly 60 per cent of farmers themselves go to bed hungry. With agriculture deliberately being made economically unviable, more than 42 per cent farmers want to quit farming if given a choice.

Mainline economists appear keen to push the farming population towards urban centres. With the World Bank viewing rural-urban migration as the ultimate indicator of economic growth, Indian economists have been parroting the same prescription. The Economic Survey 2013-14 points in the same direction. Raghuram Rajan, the governor of the Reserve Bank of India also echoes the same argument.

Rising food inflation comes in handy to up the ante against Minimum Support Price (MSP) being paid to farmers. APMC mandis are recommended for dismantling. Farmers are being pushed to accept the market doctrine, which means that distress sale will now become a norm.

In Bihar, which has had no APMC since 2007, markets have failed to infuse any confidence by way of economic prosperity among food growers. But that’s what the markets like. They should be able to source cheaper farm commodities, thereby adding to their profits. What happens to farmers has never been their concern, nor will it ever be.

The neglect of agriculture has become more pronounced since economic liberalisation was introduced in 1991. I recall the famous budget speech of then Finance Minister Manmohan Singh, when he showered all the bounties on industry and in the very next paragraph said that agriculture remains the mainstay of the economy. But since agriculture is a state subject, he left it to the state governments to provide the crucial impetus to farming.

What he forgot was that by the same logic, industry too, being a state subject, should have been left to the state governments. The bias was clearly visible.

Although agriculture grew at an impressive rate of 4.1 per cent in the 11th Plan period (2007-8 to 2011-12), it received a dismal financial support of Rs 1 lakh crore. For a sector which directly and indirectly employs 60-crore people, an outlay of Rs 1 lakh crore for five years amounts to mere peanuts.

In the 12th Plan period (2012-13 to 2017-18), agriculture is projected to receive Rs 1.5 lakh crore. Compare this with the Rs 5.73 lakh crore tax exemptions showered on the industry in 2014-15 alone. It’s clearly reflective of priorities and in fact, as I have been saying for long, farmers have disappeared from the economic radar altogether.

Despite such low budgetary allocations for agriculture and the fact that public sector investments have been drastically falling in rural areas, there is no visible intention of resurrecting the farm sector reeling under terrible economic distress. As if this were not enough, all the noise in TV studios is over demands to cut down on subsidies meant for the poor – food, fertilizer, diesel, gas and MNREGA. But there is not even a whimper in favour of the removal of tax exemptions for the Indian industry.

Since 2004-05, Corporate India has been showered with tax exemptions to the tune of Rs 31 lakh crore. This was expected to boost industrial output and create jobs. But while only 1.5 crore jobs were added in the past 10 years, industrial production has not shown any significant jump.

To add to it, Corporate India is sitting on a cash surplus exceeding Rs 10 lakh crores, and has also defaulted on bank payments (termed as non-performing assets) by another Rs 10 lakh crores or so. It clearly shows how the poor are being denied legitimate economic support while resources are being very conveniently diverted for the rich elite.

However, I still expect Prime Minister Narendra Modi to reverse the trend and make a historic correction. During his election campaign, Modi had repeatedly emphasised the dire need to make farming economically viable. He has also been talking of providing modern amenities in the villages. A beginning can be made by revitalising agriculture in a manner that brings back the smile on the face of farmers. In addition to creating 100 smart cities, Mr Modi should also focus on creating smart villages.

A smart village will automatically link local production with local procurement and local distribution. A smart village will not only bring Internet connection to the rural hinterlands, but will also provide support to sustainable agricultural practices. A network of small scale industries linked to agriculture, and a strong network of rail and road corridors with civic amenities such as education and health for all, including farmers, will transform the face of real India.

That’s the kind of change India expects. That’s the big ticket reform the country has been waiting endlessly for over the last 67 years. Smart villages will not only reduce growing inequality but also bring acche din for the last person in each and every corner of the country. It will at the same time reduce the burden of influx on the cities, and help tackle environmental challenges, too.

Devinder Sharma16 July 2014

Devinder Sharma is a food and trade policy analyst and chairs the New Delhi-based Forum for Biotechnology & Food Security. His blog, "Ground Reality" can be read at devinder-sharma.blogspot.com